The Income Tax Act, under section 80C, allows taxpayers to invest up to INR 1.5 lakh in particular securities and claim it as a deduction from their taxable income. Among all the options, the three most popular ones are PPF, ELSS and a Tax Saving FDR. For an effective tax-saving investment option, read the detailed comparison of these three options.
| Particulars | PPF | ELSS | Tax Saving FDR |
| Minimum Investment amount | Rs 500 | Rs 100 | Rs 500 |
| Maximum Investment amount | Rs 150000 in a FY. | No Upper Capping/ Restriction | Rs 150000 in a FY. |
| Lock In Period | 15 Years | 3 Years | 5 Years |
| Return | 7-8% | 10-15% | 5-7% |
| Risk | Low | Moderate to High
(Risk inherent in equity investments) |
Low |
| Premature Withdrawal | Partial withdrawals after 7th year for emergencies only. | Not Allowed | Not Allowed |
| Availability of Loan | Yes | No | No |
| Joint Holders | The PPF account cannot be held jointly, though you can make a nomination.
|
Yes, the tax benefit is available only to the first holder of the account. | Yes, the tax benefit is available only to the first holder of the account. |
| Taxation on Maturity | Interest earned on PPF is Tax free (Exempt from tax) | LTCG of up to Rs. 1 lakh per year on an ELSS is exempt from tax. | Interest earned on Tax Saving FDR is fully taxable. |
